Exclusion or Engagement: Rethinking Tobacco for Client Portfolios – Hexis Capital Management – 9.1.26

Summary:

Tobacco has been among the best-performing US industries for half a century, and it is now replacing its own core product. Smoke-free products grew from about 8% of world nicotine volume in 2015 to 17% in 2025, and the FDA has allowed a nicotine product to carry an explicit lower-disease-risk claim against cigarettes. This session asks whether that changes the case for holding the sector in a client portfolio.

The webcast will cover:

• What tobacco harm reduction is: why it is inhaling smoke rather than nicotine that causes smoking-related disease, what the independent evidence supports, and why the subject is still contested.
• Exclusion or engagement: what each achieves for a client portfolio and for public health, and what 25 years of exclusion has cost the largest US public pension fund.
• Why we expect the companies that transition best to produce the strongest returns, how the Hexis Nicotine Transition Score identifies them, and how NICO weights and enages them.
• What a tobacco allocation is for: income, diversification or a re-rating, and where a concentrated single-sector fund fits in a client allocation.

Accepted for 1 CFP / IWI / CFA CE Credit

Speakers:

Pieter brings 30 years of experience as an investment analyst with leading global banks and fund managers, including Credit Suisse and UBS, with over 20 of those years focused on the tobacco sector. In 2020, he founded Idwala Research Ltd, a research and advisory firm dedicated to advancing tobacco transformation and harm reduction. He was also a member of the Technical Committee for the 2022 Tobacco Transformation Index, an initiative of the Foundation for a Smoke-Free World ranking the world’s largest tobacco companies according to how successfully they were transitioning away from combustible cigarettes. Pieter holds a B.Com (Hons) in Investment Management from the University of Johannesburg.

Jonathan has 30 years of experience in equity research and asset management, having served as an analyst at Merrill Lynch, Morgan Stanley, and lastly Deutsche Bank, covering insurance, tobacco, and latterly the combined consumer staples sectors. In 2013, he co-founded Ash Park Capital, an investment boutique focused on long-term capital growth through global branded consumer companies. Over the course of his career he has been a regular speaker and panelist at industry conferences and events dedicated to advancing the cause of tobacco harm reduction. Jonathan holds a BA (Hons) degree in History from the University of Cambridge.